The Perennial Question: How Can You Balance Essentials and Extras?

Dear Carrie,

As a Millennial with an entry-level salary I'm often torn between the cost of living independently and enjoying even a modest lifestyle. Being saddled with student loans and having set sacrosanct savings goals, I want to learn tried and true ways to keep living and lifestyle expenses in check while still living life. --A Reader

Dear Reader,

You pose this as a Millennial question, but actually, it's kind of a perennial question. In fact, I've had retirees ask me basically the same thing! You're ahead of the game by thinking about this now, because if you can learn to strike a balance today between living within your means and still having some fun, you'll be able to carry that lesson with you for a lifetime.

The fact that you've already set "sacrosanct savings goals" means, to me, that you're on the right track. I'm all for living life to the fullest, but saving is one of those things that I believe can't be sacrificed if you want to have any kind of financial security. So that's actually one "tried and true" method that you seem to have already mastered.

But before we get into other practical ways to handle both essential expenses and enjoyment, let's first talk about attitude.

Start with the right mindset

I'm a big proponent of what I call "mindful spending." This basically means knowing where your money is going--and where you want it to go. So many of us spend our money unconsciously. And it's no wonder, because technology makes it so easy to do. From paying for a daily latte to buying a big-ticket item, credit cards, debit cards, Apple PayTM--you name it--all make it easy to spend without noticing how much.

So the first step is to focus on your spending patterns. An easy way to do this is to write down everything you spend on incidentals for a week. Not the necessaries like housing and food, but the extras that you probably buy without thinking, things like that second coffee, lunches out or an impulse purchase. You might be surprised how these small things add up.

Take these practical steps

With new insight into your spending, think about what's truly important to you. Because mindful spending is really about your values and being willing to economize in one area to give yourself a little extra in another. That's something most all of us have to do, no matter our age or salary level. Here are some practical ways to make it work:
  • Add an extra line item to your budget--Sticking to a budget is essential to pay for necessaries like living expenses, debts and savings. But once those are covered, also put in a line item for fun, even if you have to cut back somewhere else to do it. No matter if it's a small amount for a weekly night out or a cumulative amount for something like a weekend getaway, if you earmark that money specifically for enjoyment, you can use it freely for just that.
  • Pay cash for extras--Credit is a convenience and a curse. When you charge things you can't afford, it's easy to get caught in the cycle of always playing catch up rather than having money to spare. So pay down your balances (that's part of your budget) and commit to charging only what you can pay off every month. Then pay cash when you treat yourself and you'll enjoy it even more.
  • Make added money do double-duty--When you get a raise or bonus, stick to your baseline budget and divide the extra money between your savings and your entertainment fund. You'll get a double benefit.

Make the most of your time

As a Millennial, you do have a distinct advantage when it comes to money--time. So here are two other important things to do to right away. Both can help you make the most of future opportunities while still enjoying the present:
  • Save for retirement--We're talking about how to enhance your current lifestyle, but what about your future lifestyle? Here's where time is definitely on your side. Start a lifelong habit of putting 10-15 percent of your annual salary towards retirement now and chances are you'll be able to enjoy a financially secure retirement.
  • Start investing--Again, this is where time can work for you. A lot of Millennials shy away from investing, but with a long time horizon, establishing a diverse portfolio of investments is the best way I know to help make your money grow. Of course, don't do it blindly, and stay mindful of the risks of investing. First do some research. Talk to your family. Get advice from a reputable source or service. You can start small--but start now.
Give yourself permission

For people like you who appear to have a handle on the practical side of finances, carving out money for what's perceived as "impractical" can be a challenge. There's always a reason to put any extra money in savings for a future goal, whether a house, a child's education or retirement. At the same time, you're working hard and deserve to live a little today. Again, the trick is to be conscious about the way you do it--and then give yourself permission to enjoy.

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Looking for answers to your retirement questions? Check out Carrie's book, "The Charles Schwab Guide to Finances After Fifty: Answers to Your Most Important Money Questions."

This article originally appeared on You can e-mail Carrie at, or click here for additional Ask Carrie columns. This column is no substitute for an individualized recommendation, tax, legal or personalized investment advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner or investment manager. Investing involves risks, including loss of principal. Diversification strategies do not ensure a profit and do not protect against losses in declining markets. Apple PayTM is a trademark of Apple Inc. registered in the U.S. and other countries.